Senior Relationship Manager
Summary: Looking for the big picture
Good Morning,
Markets remain fascinating with FX particularly so
The USD Index trades as high as 107.25 before giving up ground to 106.83. EURUSD is at 1.0203, GBPUSD 1.1950 and USJPY at 13570. Gold and Silver sold off yesterday but could recover to 1746 and 19.36 for now. USDTRY is approaching recent highs and is trading at 17.24.
10 Year rates rise to 2.96 and the 2/10 rates remain inverted hinting at a recession - it basically shows the expectation that further down the timeline, rates will fall again.
With commodity under pressure and energy the main cause of rising costs of living, inflationary pressures may recede a little. This should not necessarily be the case in Europe where fears of a gas shortage remain and German Minister Habeck warns of a recession in Germany. The Bund Future has risen significantly the last few days, hinting the ECB may turn out more dovish than previously expected.
Equities are in a bit of tense stasis. With all three US Indexes closing less than 0.5% away from the previous day. German stocks are a bit the outlier, gaining 1.6% yesterday and the future gains an additional 1%.
The FOMC Minutes confirmed the Fed has a tough stance on inflation but hint that FOMC members were concerned with "larger-than-anticipated" impact by the rate hikes on economic growth.
The UK remains in turmoil as Boris Johnson refuses to resign and his staff is resigning left right and center.
Our Strats Team is extremely active in all markets, please find some key articles below:
Crude oil breaking rising trend line finding support at key levels. Will they hold?
DAX/GER40 taking out March lows. Will it continue lower?
Gold broken key support. Silver dropping like a stone. How low can they go?
Junk rally on recession fears, Amazon partnering with Grubhub
Can Bitcoin continue to pay for its security?
There are few tier 1 news today, the Swiss Forex reserves are interesting for anyone who trades CHF, that aside the usual Thursday US labor data and the Canadian PMI, all at 14:30.
Next key event is the US Non-Farm Payroll tomorrow, giving a hint on the next rate decision.
Watch commodity prices and any indications on Russian Gas deliveries to Europe.
As International Bond Markets seem to become a subject again, kindly be aware that there is decent number of mutual funds on the platform that give you access to professionally managed exposure to fixed income markets – in the last couple of years. Many of our clients stopped trading bonds simply due to le lack of attractiveness of the asset class. That seems to be changing.
If you would like some assistance, please contact us
Trade safely
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist